(Commentary) – International organizations that estimate Burma’s economy say that its annual growth rate is around 5 percent. The inflation rate is estimated to be about the same figure.
With the formation of the new Parliament, investors and international organizations are hoping that the very first bold economic measure in the financial area will be to realign the country’s foreign currency exchange rate. Most local commetators see financial reform also including a unified exchange rate and lower income taxes for individuals and businesses. One weekly journal hoped that new government would focus on trying to raise the living standard of ordinary citizens.
If the Burmese economy can be managed to realize its potential growth with business friendly initiatives and a new mind set, there is little doubt that Burma’s economy could rapidly expand. With more liberal and consistent business laws, the country will attract foreign capital looking for cheap labour and production costs.
The former military government has issued regular calls for the West to abandon economic sanctions, but no dramatic changes can be expected on that front because the West is waiting for the newly established government to show greater commitment to democracy and human rights.
Areas where great social committment is badly needed include more spending on health and education in the new budget.
Realistically, there is little hope for economic reform unless it comes from the junta-backed Union Solidarity and Development Party, which controls the new Parliament. The problem is whether it is truly committed to wide ranging economic reform.
Among the most pressing issues are some form of true ownership of land for farmers, allowing them access to agricultural loans, to create crop insurance systems, liberalization of the agricultural market and diversification of crops.
Recently, the government banned the export of rice in order to lower rising prices and to avoid a shortage of rice in local consumption.
Some Burmese academics are optimistic in areas of greater governmental transparency, consistency, the rule of law, participatory rule-making, business friendly environments and macro economic management. One can cautiously hope that their optimism is justified.
As a frequent visitor to Burma, I’m familiar with some favorite Burmese expressions. One is, ‘It’s too early to make comments about…’. Another is, ‘It’s too late to comment…people should have spoken earlier…’.
In order to deal effectively with the future, we can hope that Burmese officials will avoid those two extremes and get down to the business of improving the country’s economy and the life of the people.
John Hanness is a pseudonym for an economist who has observed Burma for many years.
